The Surat Bench of Income Tax Appellate Tribunal (ITAT) remanded the matter to the Assessing Officer (AO) for fresh consideration in a matter involving a penalty under Section 271B of Income Tax Act,1961, which was imposed based on bank transactions treated as turnover.
Ramesh P Mehta, HUF, appellant-assessee, appealed against the order dated 27.10.2023 passed by the CIT(A).A 51-day delay occurred in filing the appeal before the tribunal. The assessee counsel explained that the delay was unintentional, as the individual, unfamiliar with tax laws, believed that appealing the tax demand order covered penalty orders as well. The appeal was later filed on a tax consultant’s advice, causing the delay.
The department argued that the explanation was vague and lacked a valid reason.
After reviewing the case, the tribunal found the delay unintentional and not due to negligence. Prioritizing substantial justice over technicalities, it condoned the delay.
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The assessee’s counsel stated that the quantum addition had already been sent back to the AO by the ITATl and argued that the penalties should also be reconsidered. It contended that the AO wrongly treated all bank transactions as turnover for imposing penalties under Section 271B of the Act.
The counsel also argued that the penalty was imposed without giving the assessee a hearing, violating natural justice. A copy of the tribunal’s quantum assessment order was submitted for reference, and a fresh decision was requested.
The Senior Departmental Representative (Sr-DR) supported the lower authorities’ orders and sought dismissal of the appeals.
Read More: ITAT sets aside Penalty, Orders Fresh Proceedings after Reconsideration of Quantum Addition
The two member bench comprising Pawan Singh (Judicial Member) and Bijayananda Pruseth (Accountant Member) reviewed the arguments and observed that the quantum addition had already been sent back to the AO in ITA Nos. 479 to 481/SRT/2023. It agreed that bank transactions could not be treated as turnover for imposing penalties under Section 271B. Since the quantum addition was remanded, the tribunal also sent the penalty matter back to the AO for fresh consideration.
In short,the appeal filed by the assessee was allowed for statistical purposes.
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